Value Based Payment

Model Targets Hundreds of Millions in Medicare ED Spending

February 19, 2019 2:52 pm

The key participants in the model will be Medicare-enrolled ambulance service suppliers and hospital-owned ambulance providers, according to CMS.

Feb. 18—Heralded as part of a shift in care to lower-cost locations, a new Medicare model coming early next year will incentivize paramedics to find alternative treatment sites to emergency departments (EDs).

The Center for Medicare and Medicaid Innovation (CMMI) plans to launch in early 2020 a five-year pilot, called the Emergency Triage, Treat, and Transport (ET3) model, in which emergency medical services (EMS) responding to calls from Medicare fee-for-service (FFS) beneficiaries would be given incentives to use either telehealth services or non-ED care destinations.

Medicare’s current approach of paying for unscheduled, emergency ground-ambulance services when beneficiaries are transported to an ED creates an incentive to transport all beneficiaries to the hospital even when an alternative treatment option may be more appropriate, according to the U.S. Department of Health and Human Services. Medicare regulations now limit payment for emergency ground-ambulance services to cases in which beneficiaries are transported to hospitals, critical access hospitals, skilled nursing facilities, and dialysis centers.

Two new ambulance payments will pay for:

  • Treatment in place with a qualified healthcare practitioner, either on the scene or connected using telehealth
  • Unscheduled emergency transport of Medicare beneficiaries to viable destinations (such as 24-hour care clinics) other than those covered under current regulations (such as hospital EDs)

The model also will encourage development of medical triage lines for low-acuity 911 calls in regions where participating ambulance suppliers and providers operate.

Ambulance services and providers could earn a 5 percent payment bonus in the model’s later years based on their performance on quality measures.

Partnering providers treating Medicare patients under the model will receive standard Medicare FFS rates for their services.

CMS also aims to encourage ET3 model participants to partner with other payers, including state Medicaid agencies. The agency plans to begin accepting applications to participate in the model this summer.

Some Concerns

The model’s release came soon after a Premier analysis found that more than 4.3 million ED visits, which cost an estimated $8.3 billion, are potentially preventable each year. The analysis concluded that more-effective primary care management was needed.

Blair Childs, senior vice president for Premier, agreed that curbing unnecessary ED is a good way to cut costs and deliver care in the most appropriate setting. However, he urged such efforts to move “further upstream in the care continuum.”

The 120 Medicare accountable care organizations (ACOs) advised by Premier have used improved care coordination with primary care providers to successfully prevent inappropriate ED visits.

So, he urged CMS to allow its ACOs to partner with ambulance providers and local government agencies to implement aspects of the ET3 model within the ACOs, which would allow ACOs to be accountable for the full continuum of care.

“We encourage CMMI to continue to invest in models that align incentives across the care continuum to prevent avoidable and costly visits to the ED,” Childs said in a statement.

Implications for Payment

The ET3 model was billed by HHS Secretary Alex Azar as “a signal to everyone involved in American health care that we want to rethink how and where patients are treated.”

“A value-based healthcare system will deliver each patient the right care, at the right price, in the right setting, from the right provider,” Azar said at the model’s release. “In many cases, that may look a lot different from what a patient typically receives today.”

The financial implications of the model were underscored by a CMS fact sheet, which highlighted previous HHS projections that annual Medicare savings from transporting beneficiaries to physicians’ offices instead of hospital EDs would amount to $560 million. The projected savings did not include avoided inpatient admissions from the eliminated ED visits.

“Thus, there is great opportunity for improvement in care quality and reduction in costs to the Medicare program through innovation in EMS,” the CMS fact sheet stated.

Azar promised similar efforts in “other areas where we can reimagine care delivery to lower costs and save lives.”

The scope of the ET3 model will be limited to 40 geographic areas, according to a CMS information page, but CMMI could implement the model across Medicare if the pilot produces savings without sacrificing quality.

In 2016, Medicare beneficiaries accounted for 28.4 million ED visits, including those made on an outpatient basis and those that resulted in an inpatient admission.

From 2010 to 2016, hospital outpatient ED visits increased by 7 percent among all payers and by 14 percent among Medicare beneficiaries, according to a report from the Medicare Payment Advisory Commission (MedPAC).

Additionally, “faster growth at EDs relative to physician office visits suggests some movement in lower-severity cases from lower-cost physician offices to higher-cost EDs,” the report stated.

 MedPAC has recommended Medicare ED payment changes that would increase funding for some rural off-campus EDs and cut rates for urban off-campus EDs.

Medicare is the latest payer to target unnecessary ED care. In recent years, an increasing number of commercial health plans have denied coverage for ED care of nonemergency conditions. The highest-profile insurer to reject coverage of nonurgent symptoms is Anthem Blue Cross Blue Shield, which implemented such no-pay policies in Indiana, Georgia, Kentucky, Missouri, New Hampshire, and Ohio.

The financial impact on hospitals from the potential spread of the Anthem policy was spelled out in a 2018 report from Moody’s Investors Service, which concluded it could create “volume declines as well as further pressure on margins and cash flow.”

Specifically, hospitals likely will see fewer ED visits, lower revenue, and higher bad-debt rates. Additionally, “physicians will see less reimbursement under the reduction in payment for certain same-day services,” Moody’s analysts wrote.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare 


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